EUR/USD Fundamental Forecast– May 12, 2016

The EUR/USD remained in a tight trading range while posting a higher close at 1.1351, up .0024 or +0.21%. Just a week ago, the Euro was trading at its highest level of the year at 1.1616.

There are no major economic reports today so traders are expected to remain cautious while focusing their attention on the possibility of a U.K. exit from the European Union, renewed issues with Greece and the fear of deflation. Traders are also watching the price action in the Japanese Yen after comments earlier in the week from Prime Minister Shinzo Abe suggesting that Japan would intervene if the Yen firmed to between 90 and 95 per dollar.

The European Central Bank would like to see a weaker Euro, but investors have not cooperated, sending the single currency to its highest price since late August 2015 just last week. Technicians will point out that last week’s bearish reversal top could provide some relief, but the EUR/USD really has to trade through its recent bottom at 1.1214 to draw the attention of short-sellers.

The ECB is also counting on the Fed to drive the Euro lower, however, the U.S. central bank has been hesitant to raise interest rates given a sluggish domestic economy and an unstable global economy. Traders are giving a rate hike in December only a 50/50 chance.

Red flags are also being raised over Greece. Traders may hold the Euro in a range until the release of the Greek GDP report on Friday. First quarter, year over year GDP is expected to show the economy shrank by 1.3%. The report is expected to cause renewed volatility with a sharp break a possibility if GDP misses to the downside.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Thursday, May 12, 2016

Government Bond Auctions

Date Time       Country           Auction

May 11 11:03 Sweden Holds bond auction

May 11 11:30 Germany Eur 5bn Jun 2018 Schatz

May 12 11:10 Italy Holds bond auction

May 12 17:20 Sweden Details of I/L auction on May 19

May 12 N/A Ireland Holds bond auction